Companies give leading LNG site for Alaska project

BECKY BOHRER, Associated Press

The companies seeking to advance a multibillion dollar natural gas pipeline project in Alaska have a leading contender for the terminal site where gas would be liquefied and shipped to Asia, signaling that a decades-old dream could still become a reality.

Exxon Mobil, BP, ConocoPhillips and TransCanada Corp. announced Monday that the Kenai Peninsula town of Nikiski is the leading contender. Senior project manager Steve Butt said there are three or four other sites are still being considered - he declined to identify those - but said Nikiski has the land needed for the plant and the companies know they can route a pipeline there. Land acquisition work is underway.

A liquefied natural gas plant operated in Nikiski for decades and provided exports to Japan. But ConocoPhillips and its then-partner announced plans to close the plant in 2011, citing market changes. Sporadic shipments continued until ConocoPhillips decided earlier this year not to renew its export license. The state has asked ConocoPhillips to reopen the mothballed site and apply for a new license to provide an incentive for petroleum companies to explore and invest in Cook Inlet.

Butt said the liquefied natural gas plant envisioned as part of the pipeline project would be 16 or 17 times larger than that plant.

Alaskans have long dreamed of a gas line as a way to shore-up revenues as oil production - Alaska's economic lifeblood - declines, create jobs and provide energy for residents. Monday's announcement was another step toward the decades-old dream of building a gas pipeline to rival that of the trans-Alaska oil pipeline, though the companies have not yet committed to building and continue to stress the need for "competitive, predictable and durable" terms on oil and gas taxes and royalties.

The pipeline envisioned would span 800 miles from the prodigious North Slope to south-central Alaska, and the mega-project could cost $45 billion to more than $65 billion.

The initial focus of the project was to have a pipeline run from the North Slope into Canada to serve North American markets. But progress stalled, and Gov. Sean Parnell, in a bid to get things going again, urged Exxon Mobil, BP and ConocoPhillips - the North Slope's three major players - in 2011 to get behind a project that would allow for liquefied natural gas exports to the Pacific Rim if the market had truly shifted away from the Lower 48.